Shop around for better exchange rates to avoid ‘fee shock’

As growing numbers of Australian small businesses expand into overseas markets, many face ‘fee shock’ when paying suppliers simply because they haven’t shopped for the best exchange rate deals.

Research commissioned by global comparison service Money Transfer Comparison found that nearly two-thirds (60 per cent) of Australian businesses don’t check exchange rates or shop around for the best rates and lowest fees before making international payments and money transfers, yet half (52 per cent) get ‘fee shock’ after the transaction.

Small and micro-businesses are least likely to check exchange rates

The survey of 250 business owners and senior decision-makers found that businesses with more than 50 employees are more likely to hunt down better exchange rates on money transfers, with 58 per cent of large companies and 57 per cent of medium-sized businesses indicating that they check rates and look for better deals. This compares with only 44 per cent of small businesses (11-50 employees) and 35 per cent of micro-businesses (1-10 employees).

Money Transfer Comparison Managing Director, Alon Rajic, says small businesses could save big if they shopped around for better transfer rates on their overseas payments to suppliers and manufacturers.

“Unfortunately, many may not be aware that exchange rates and fees vary significantly across banks and fintech platforms – this is why comparing providers is a vital action to take before transferring money overseas,” Rajic said. “For instance, fees for international money transfers through Commonwealth Bank can range from $6 to $30, depending on whether internet, app, phone banking or a physical branch is used, while fees through ANZ can range from $0 to $32 for transactions under $10,000 sent to some countries, depending on the platform used.”

Exchange rates are still volatile

Australia is recognised as the third most expensive G20 country for international money transfers, which makes it all the more important for cash-strapped small businesses to choose their global money transfer providers wisely.

“I was surprised to see that a large proportion of businesses in our research aren’t doing their due diligence and checking exchange rates and fees before making overseas payments,” Rajic said. “While the performance of the Australian dollar against the USD is predicted to improve this year, exchange rates have been volatile, mainly due to the global economic slowdown.

“Comparing exchange rates and fees across providers can benefit smaller businesses using overseas suppliers and manufacturers. The ACCC estimates Australians could save up to AUD$500 on payments of around USD$7,000 simply by comparing provider rates. Businesses should also consider ways to reduce costs and waste in other areas, such as re-negotiating contracts with suppliers, contractors and manufacturers.”

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